117. Brazil's scientific achievements and potential are not widely reported in the UK. A common view is that expressed by Lloyd and Turkeltaub who contrasted the eagerness of China and India to compete with the West for 'intellectual capital' by looking to build "top-notch universities, investing in high, value-added and technologically intensive industries and utilising successful diasporas to generate entrepreneurial activity in the mother country" with Brazil's apparent reluctance to invest its windfall gains from high commodity prices in long-term economic development, including the investment necessary to attract leading professionals.[292]

118. We were therefore intrigued to hear that 2007 had been designated the Year of UK­Brazil Partnership in Science (hereafter referred to as the Year). Our interest led us—unusually for our trade inquiries—to invite the Government's Chief Scientific Adviser (CSA) and head of the Office of Science & Innovation, Professor Sir David King, to give evidence.

119. As the Foreign Office state, "Science collaboration is a major way of enhancing our overall bilateral relationship with emerging economies and in turn can be used to promote influence, for example, on the regulatory framework, by actively promoting UK approaches and/or other internationally recognised benchmarks."[293] Regarding our competitors, the CSA said that the UK accounted for 12.8% of the internationally co­authored collaborative papers with Brazil, after France with 13.8% and the US with 39%.[294] UKTI told us that:

"France and Germany have very active collaboration programmes involving considerable bilateral investment and joint working with the Brazilian science base. This includes joint projects and considerable exchange of academics in both directions. Japan is also active […] but not quite at the same level as France and Germany.

"Spain and Italy are active along similar lines to France and Germany but at a significantly lower level of investment. Collaboration with the US is mainly through academics working on joint projects rather than through a structured programme of collaboration between the science communities." [295]

120. UKTI considered that Brazil still has substantial potential for improvement in this area, and that despite its "world class universities, many of which are private, spending on quality primary and secondary schooling is insufficient to affect a broad swathe of the population. This despite a fairly favourable 4.3% of GDP spent on public education."[296]

Government science strategy & Brazil

THE GLOBAL SCIENCE & INNOVATION FORUM (GSIF)

121. The CSA chairs the Global Science & Innovation Forum (GSIF) which was set up in 2005 as a "vehicle for cross-government exchanges of information and ideas to improve co-ordination of the UK effort in international science and innovation collaboration".[297] Its main objective is to ensure the UK is "the partner of choice for global business looking to locate Research and Development (R&D) activities overseas, and for foreign universities seeking overseas collaboration."[298] The GSIF is made up of officials from the OSI, DTI and UKTI, as well as the Foreign and Commonwealth Office, the Department for Environment, Food and Rural Affairs, the Department for International Development, the British Council, the Royal Society, Research Councils UK, the Department for Education and Skills, HM Treasury and the Department of Health. The Government's March 2006 report Science & Innovation Investment Framework 2004-2014: Next Steps featured two policies: a £9 million programme, to be delivered through UKTI, to attract business R&D to the UK and promote innovative UK firms abroad; and the promotion of international science and innovation links with universities and high-tech clusters, particularly in China and India.[299] The CSA said that while he was aware of the £9 million UKTI programme, he was involved only minimally in it.[300]

122. In October 2006 the GSIF strategy identified priority countries using four 'axes': research, innovation, influence and development. China and India featured in three of the axes, and the fourth—the development axis—focused on Africa. Brazil featured in just one: 'influence'.[301] The CSA told us this axis featured countries "where it is in the strategic interests of Britain to develop closer interests".[302] Brazil's history of innovation and scientific base were not yet strong enough, he suggested, to place it among the first two categories, but its position as a 'BRIC' and what he referred to as "the whole climate change/energy/biodiversity agenda" meant that Brazil would play an important role in the future.[303]

JOINT COMMISSIONS

123. The UK has established Joint Commissions on Collaboration on Science, Technology and Innovation—matched-funding networking schemes with bilateral Ministerial­level meetings held every two years to increase science and innovation collaboration—with China, India, Japan, Russia and South Korea.[304] There is also a UK-India Education and Research Initiative that aims to encourage scientific collaboration, with funding of £12 million. While there is not currently a Joint Commission with Brazil, UKTI told us that the UK has committed £50,000 towards networking with Brazil to be managed by the Royal Society, but it was "awaiting confirmation of matched funding from the Brazilian side."[305] The CSA spoke of the possibility of adding a Joint Commission with Brazil although "no decision has been made at this point."[306]

LIFE SCIENCES & UKTI SECTOR STRATEGY

124. UKTI explained that the high quality of research into biotechnology, biodiversity, pharmaceuticals and vaccines in Brazil had encouraged increasing involvement of multinationals.[307] It also noted Brazil's active science parks, and believed that the best opportunities for partnerships with UK companies were in the fields of vaccines and genetics, with great interest in "collaborations for clinical trials and new drug discovery for high quality products, based on biodiversity".[308]

125. Life sciences is one of five sectors where UKTI plans to devise sector strategies. The CSA subsequently informed us that the strategy will include the biotechnology, pharmaceuticals and healthcare industries, and that a wide consultation is currently underway involving the OSI among others, with a launch planned for September 2007.[309]

SCIENCE & INNOVATION NETWORK

126. The Science & Innovation Network was set up by the FCO in 2000 to bring together science and diplomacy, which "adds value by being a network of in-country experts familiar with both the UK customer base and host country networks". It is co-ordinated by the FCO Science and Innovation Group in collaboration with OSI and the Chief Scientific Adviser, and works with bodies like the British Council and UKTI. The network is now around a hundred strong,[310] covering 35 embassies and consulates in 22 countries including São Paulo in Brazil.[311] Many of the officials involved are locally employed "so they really understand the local system", with "a very good capability of supporting visitors to each of those countries" and who "become very knowledgeable about the country they are serving".[312] The CSA told us that there were three science and innovation cultural attachés in Brazil, which "does reflect the importance that we attach to our work with Brazil."[313] He also said that these three officers were the only ones among the Mercosur countries.[314]

The UK-Brazil 'Year of Science'

127. The UK and Brazil signed a Joint Plan of Action on Science, Technology and Innovation in March 2006 during the Brazilian President's state visit to the UK.[315] The Year is part of this, and covers health, agriculture, climate change, nanotechnology, and science and technology management. The Year intends to "promote co-operation and encourage the development of joint scientific and technological projects in areas of common interest, particularly in relation to climate change, agriculture and health."[316] The previous Year of Science was with China.

128. The CSA believed that Brazil offered a very significant opportunity, in terms not only of its resources and strategic importance to the UK, but also of the science base that it offers. The CSA outlined the five themes of the programme which was launched at the end of March 2007: "firstly, planet Earth, where we are looking at these issues of climate change, energy, renewables, agricultural science, animal health and biodiversity; secondly, human life; thirdly, reaching beyond, that is stretching into the sciences of the future of nanotechnology and advanced engineering; creativity is the fourth one—digital content, media, design, intellectual property; and then, finally, linking up science co-operation, science policy issues."[317] The CSA's office has seconded a person to help with the Year, which will comprise events such as: a series of public lectures, mostly by UK academics; networking opportunities through science fairs; structured discussions between UK and Brazilian stakeholders on selected areas where there are common interests; and research workshops.[318] During the CSA's visit from 26-30 March 2007 he delivered speeches on climate change, discussed climate change aspects of the forthcoming G8 Summit, and he also took part in a number of bilateral ministerial and other visits. Links were made, notably with the Amazonas region in the areas of biodiversity, ecosystem service valuation, co-operation on access to biodiversity, and intellectual property rights.[319] Also a 'consultative committee' is to be established to reach an action plan on partnership opportunities that have been identified by the scientists in the CSA's delegation, and to ensure long-term initiatives last beyond the Year itself.

129. UKTI said that events associated with the Year would also include "a design event in April launched by the Duke of York, and the Lord Mayor opening an event on human life in September."[320] The CSA said that the Year "has to involve both the research sector in our universities and the research sector in our industries and theirs, but also the full panoply of the UK trade and industry interests in raising the profile of British industry in Brazil."[321]

130. The Year has to be seen within the wider context of developing trade with Brazil. It features among the fifteen JETCO recommendations, which emphasised the bioscience and nanotechnology sectors. The recommendations also encompassed bilateral co­operation between accreditation and patent organisations,[322] and some progress has since been made on this with the organisation of a visit to Brazil by the UK Intellectual Property Office (formerly the Patent Office).[323]

Biofuels & Ethanol

131. Ethanol as a fuel in Brazil dates back to 1925, and there was a boom following the 1973 oil crisis when Brazil made efforts to reduce its reliance on imports of fossil fuels. Ethanol has now replaced 40% of petrol use.[324] Brazil has certain comparative advantages in ethanol production. Unlike American or European processes based on crops (e.g. barley, corn or wheat) that must first be converted at significant expense into sugars, Brazilian processes are based on sugar cane, which its climate favours, obviating any need for conversion. Therefore production costs are lower for Brazil: 22 cents a litre, compared with 30 cents for ethanol derived from corn. These low production costs make it a lucrative business for farmers, even without subsidies on the scale of those seen in the US and the EU.[325] Over the next five years $12.2 billion of expenditure is planned on 77 new ethanol plants, as well as $2.4 billion for improvements to existing plants; Brazil is expected to have 412 distilleries producing 9.5 billion gallons of ethanol by 2012.[326] Over thirty years "sugarcane plantations have been spreading north and west across Brazil's hinterlands, replacing coffee, citrus and pasture."[327] While less than 20% of Brazil's ethanol production is exported,[328] a Brazilian Ministry of Science and Technology study found that exports could increase from 3 billion litres at present to 200 billion litres by 2025, which could replace a tenth of global petrol consumption.[329]

132. Brazil faces the high trade barriers of the EU and the US.[330] Exports to the US face a 54 cent-per-gallon tariff barrier plus a 2.5% ad valorem duty, while Brazil does not benefit from the tariff-free access for ethanol exports under US preference schemes with countries in Central America, the Caribbean and the Andean Community.[331] The US also subsidises corn production, and a 51 cent per gallon subsidy for combining ethanol and gasoline is "effectively restricted to domestic producers" due to the tariff.[332] The EU, too, has high tariffs on imports of ethanol from Brazil, and its bio-diesel specifications "favour expensive local rapeseed oil" over imports.[333]

133. At a biofuel 'summit' in Brazil in March 2007 the US and Brazil—which together account for more than 70% of global ethanol output—agreed to share research, and co-operate on promoting ethanol production in Central America and the Caribbean, but did not address tariff and subsidy issues.[334] In the same month an International Biofuels Forum including Brazil, the EU, the US, China, India and South Africa was set up to develop the world market.

134. Concerns have been raised over the environmental impact of large increases in ethanol production, including deforestation and loss of savannah in Brazil, a growing trend towards monoculture, and air pollution resulting from the burning of sugar cane.[335] However, the CSA confirmed that, for producing biofuel, sugar was his preferred option both from an environmental and an economic perspective:

"If you look at the economics of biofuels they are very sensitive to the input feedstock, so sugar cane is easily the best input both from an economic and from a carbon cycle viewpoint. Maize and beet are the alternatives, wheat is another possibility. Now, maize to alcohol is a very inefficient process so economically, for example, it is considerably more expensive and not competitive, but sugar cane to alcohol in those areas of the world—and southern Africa, Brazil, Australia, the West Indies would be examples where the climate would be perfect—would produce very competitive fuels, even at the lower prices today."[336]

135. Also, while 7 million acres in Brazil are devoted to sugar cane production for ethanol "more than 400 million acres of pasture land—none of it in the environmentally sensitive Amazon region—could be cultivated."[337]

THE UK-BRAZIL-SOUTHERN AFRICA ETHANOL PARTNERSHIP

136. Brazil is a world-leader in bio-ethanol technology.[338] In 2005 the CSA saw an opportunity to bring together climate change and African development by encouraging a bio-ethanol sector in Africa using Brazil's technology, reducing fuel imports and raising revenue. The UK­Brazil-Southern Africa bio-ethanol partnership was agreed by the Office of Science & Innovation in March 2006,[339] concentrating initially on Mozambique. We understand that the partnership has focused on development and helping governments in Africa create the "policy, regulatory and infrastructural framework" for spreading the production and use of such bio-ethanol, both in the processes of converting crops to alcohol and in the use of alcohol in cars using vari­fuel devices.[340] A scoping study on transferring the technology to southern Africa indicated that Mozambique could reduce its oil imports by 40% by shifting some agricultural production to sugar cane for conversion using Brazilian processes. [341] We welcome the commitment of the UK and Brazil to a bio­ethanol partnership with South Africa, which was reinforced by expressions of support for renewable energy trade and investment partnerships generally, and particularly in ethanol, in the UK-Brazil JETCO recommendations.[342] In doing so we note that criticism is frequently made of Brazil's bio-ethanol production, including the threat posed to the rainforest. However, all large-scale agriculture has biodiversity implications, and while the rainforest is clearly vitally important, we have been assured that the areas most suitable for sugarcane production are not rainforest areas.

EXPLOITING BIO-DIVERSITY

137. The CSA said that Brazil was funding a £2.5 billion project over ten years to create wealth from its tropical forests, including using their biodiversity in the search for new pharmaceuticals.[343] The CSA also said that he and President Lula felt that, given the UK's enormous strength in the life sciences, medical sciences and pharmaceutical sciences, the UK would be Brazil's preferred partner in this area. He noted, for example, Brazil's prowess in developing effective vaccines, but added that IPR issues "protecting the wealth creating processes that emerge" would need to be addressed. [344]

138. In science, as we have discovered in other areas, Brazil receives less attention than China and India. We hope that the Year of Science will ensure due weight is given to Brazil's strengths in life sciences in particular, and to the possibilities for mutually beneficial co­operation between Brazil and the UK. We fully support the Year of Science with Brazil, and hope that it will not only contribute to a better understanding of the potential of Brazil in science, but also result in a positive spill-over effect into the general UK-Brazil trade and investment relationship.

293   Foreign & Commonwealth Office, Science & innovation Network page; http://www.fco.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/ShowPage&c=Page&cid=1041606042759 Back

294   Q 258 Back

295   Appendix 24 (UKTI), annex H Back

296   Appendix 23 (UKTI), annex A Back

297   Created following the Government's Science and Innovation Investment Framework 2004-2014 report. Back

298   DTI GSIF page; http://www.dti.gov.uk/science/uk-intl-engagement/gsif/index.html  Back

299   http://www.hm-treasury.gov.uk/budget/budget_06/assoc_docs/bud_bud06_adscience.cfm, para 1.7  Back

300   Q 282 Back

301   See 'Global science and innovation forum: A strategy for international engagement in research and development', October 2006, annex B; http://www.dti.gov.uk/files/file34726.pdf Back

302   Q 285 Back

303   Qq 249 and 258 Back

304   http://www.dti.gov.uk/science/uk-intl-engagement/global_si_policy/global_policy/uk_joint/page28153.html Back

305   Appendix 23 (UKTI), para 7.4 Back

306   Q 255 Back

307   Appendix 23 (UKTI), annex F Back

308   Ibid., para F4.13 & 4.14 Back

309   Appendix 17 (Office of Science and Innovation) Back

310   Q 284 Back

311   http://www.fco.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/ShowPage&c=Page&cid=1041606042759 Back

312   Q 284 Back

313   Q 249 Back

314   Q 275 Back

315   The OSI and the FCO, through the Global Opportunities Fund's Economic Governance programme, are providing £150,000 in funds funding across the financial years. The CSA talked of "a budget from my office of £100,000 in total, the first £50,000 to assist the Ambassador to establish the Year; the second £50,000 to establish networking arrangements" (Q 255) Back

316   Appendix 23 (UKTI), para 7.2 Back

317   Q 249 Back

318   Q 250 Back

319   Appendix 17 (Office of Science and Innovation) Back

320   Appendix 27 (UKTI), annex B Back

321   Q 270 Back

322   Specifically between the National Institute for Metrology and Industrial Quality (INMETRO) and the United Kingdom National Physical Laboratory (NPL) and United Kingdom Accreditation Service (UKAS), and the National Institute for Industrial Property (INPI) and the United Kingdom Patents Office (UKPO). Back

323   Appendix 27 (UKTI), annex A, point 4 Back

324   'The Big Green Fuel Lie', The Independent, 5 March 2007 Back

325   'Fuel for friendship - Ethanol', The Economist, 3 March 2007, pp 56-8 Back

326   Ibid. Back

327   Ibid. Back

328   'Building a Biofuels Alliance', The Washington Post, 8 March 2007 Back

329   'Fuel for friendship - Ethanol', The Economist, 3 March 2007, pp56-8 Back

330   Appendix 23 (UKTI), annex A Back

331   'Fuel for friendship - Ethanol', The Economist, 3 March 2007, pp56-8 Back

332   'US, Brazil agree to cooperate on biofuels - but leave out tariffs', ICTSD BRIDGES Weekly 11:9, 14 March 2007 Back

333   'Burned by the sun', The Economist, 24 February 2007, p42 Back

334   'US, Brazil agree to cooperate on biofuels - but leave out tariffs', ICTSD BRIDGES Weekly 11:9, 14 March 2007 Back

335   'The Big Green Fuel Lie', The Independent, 5 March 2007 and Leader, 'A switch to biofuels will not save the planet', The Independent, 5 March 2007 Back

336   Q 268 Back

337   'Building a Biofuels Alliance', The Washington Post, 8 March 2007 Back

338   Q 265 Back

339   Scoping study available from: http://www.dti.gov.uk/science/uk-intl-engagement/page34980.html Back

340   Q 264 Back

341   Qq 264 and 265 Back

342   Appendix 27 (UKTI), annex 7 Back

343   Qq 254 and 260 Back

344   Q 262 Back